“As they got their money sooner, market players were in their turn forced to make their payments more rapidly and some pharmacies were unable to do this. Now, we can see which pharmacies were de facto in bankruptcy,” says Robert Peloiu, general manager of Farmaceutica Remedia Deva.
The company’s representatives say there are also pharmacies that, though they do not have financial troubles, they do not pay their suppliers out of “fraud” reasons and that the non-payment risk is the main problem the wholesaler is not coping with, and choosing clients increasingly resembles the drawing up of a credit file.
At the end of 2013, the wholesaler had provisions of 7 million lei (EUR1.6 million), set up to cover losses related to non-payment. The sum is over twice as high as the company’s 2013 profit of around RON3 million.
“In 2013, we could have increased sales by 25%, but we did not sell more as we did not want to sell to anybody and be subject to the risk of not cashing in the money. At the same time, profitability margins narrowed as we offered deeper discounts to cash in money faster”.
At the end of 2013, Remedia held cash worth RON16.2 million (EUR3.6 million), while the entire company is currently valued on the bourse at around RON29.3 million (EUR6.6 million).
According to Farmaceutica Remedia officials, the concentration process under way on the pharmaceutical market has been more alert that anticipated lately and will step up further as a rising number of pharmacies are struggling.
The company’s revenue has risen 2.4 times in the past 6 years amid the ongoing pharmacy network expansion, both through acquisitions and the opening of new units, and it expects revenue to reach RON258.5 million (EUR58 million) this year, up 7% on the year.
On the other hand, the company’s profit margins have contracted in recent years, with gross margins from sales dropping from 19.7% in 2009 to 14.2% in 2013 and EBITDA margin shrank from 6.3% to 1.85% in the same interval amid the crisis, tight market competition and the clawback tax.
“The start of this year was better than last year and profit will remain flat at least looking at the figures of the first three months,” says Robert Peloiu.
The company says GDP growth has not yet translated into higher sales of drugs.
Businessman Valentin Norbert Tarus owns 66.5% in the company’s stock.
(English version by Catalina Apostoiu)